Case in point: I can't stand Jerry Jones, owner of the Dallas Cowboys. He's got that arrogant Texas swagger that just rubs a Minnesota boy like me the wrong way. But he's got money. Lots and lots of money. If I were to actually be in Jerry Jones's presence, perhaps in his huge office across from his huge desk, I'd start to think, "Gee, this guy isn't so bad. Maybe I'll give him a deal on a Zeplay system." In fact, Jerry, if you're reading this, I love you and you're welcome for all of those awesome draft picks that your team got from the Herschel Walker Trade. 

It's not that I'm a shallow person, mind you. It's just that money has an intoxicating effect on even the most non-materialistic among us.

The secret to accumulating massive amounts of money is in maximizing profit. Actually, it's more than that. You need to maximize economic profit. Economic profit, in short, is extra profit that you probably shouldn't get. It's the difference between what you are paid and the minimum amount you would accept to do the exact same job. 

The inability to get economic profit is why teachers are paid so little and it costs 150 bucks an hour to get someone to unclog your drain. Lots of people value the non-monetary incentives that come with being a teacher, so they work for less than they would otherwise be worth. Nobody really wants to come to your house and stick their hand down your drain to pull out clumps of hair. Unless they're insane.

In established markets, everyone gets paid pretty much what they are worth. Marketing can skew this and there are always temporary exceptions on specific sales, but when you're talking about putting cables in walls and hanging monitors in public areas, there is profit, but generally no economic profit. In theory and on average, one dollar less and I won't send my tech out to your place to do the work. One dollar more and I'm ahead of the game. We all want to be ahead of the game.

This brings me to what has been consuming my life for the past month: The Starks Family Kitchen Remodel! Lately, everything that I see is somehow relatable to my kitchen and economic profit and how to get some is noooooo different.

Heather and I have been acting as wrecking crew and general contractors on our remodel. We've got a trusted construction guy named Rich Roase, whom we have used in the past, so we called him for our remodel. We love Rich because he cleans up after himself, does what he says and is generally very easy to work with. He also has a dog that he brings and my daughter Ellie loves dogs. She and Sky have become very close.

The great thing about Rich is that there are no surprises. When he says something will cost 2,000 dollars, that is what it costs. If there is something that comes up, he minimizes the impact and it's at least in line with reasonable expectations, if not a little better. Is Rich cheap? I don't know. Maybe?  It doesn't matter. If Rich says Tuesday it's Tuesday. If he says it will take 3 months, then that's what it takes. Said is done with Rich.

Then there is Jason the electrician. Here's a guy who quoted us 1200 dollars for 2 days of work. To finish up the installation, "It won't be too bad. I'll get it done in less than a day." Another 1200 dollars later and I'm pretty upset. If he had said 2400 dollars at the beginning, then that's what it costs and I would have been okay with it. I could plan and make decisions based on 2400 dollars worth of damage. Maybe I would have found someone who would have quoted me 1800 dollars and that's why Jason shied away from the truth. Maybe he too was surprised at how much it cost. The fact is, he got the job and was able to get almost double the amount of money I was expecting to pay him.

Here's the upshot: Customers don't really get upset about paying for things. What they get upset about is getting surprised. 

Which brings us back to economic profit. The key to short term economic profit is to surprise the customer. Here is how that works:

Bid a job for less than it will take, which gives you a much better shot at winning the business. Half way through, tell them they need more money while you're standing in their ripped apart lobby with cables and video equipment thrown all over their building. Now you've put them in a spot where they have no choice but to pony up and you can charge more than it's worth, since the change order won't go out to bid. You've just made more money than you should have! Congratulations? You'll never get another job from them again.

Long term economic profit is trickier. You're up against the joker in my last paragraph, screaming that there is no way they can get the job done for that price. You show them plans. You show them equipment lists. You explain in great detail why they won't be happy with analog RF modulators on their brand new LCD monitors. You lose the job.

Next time around, however, they're wiser. The other vendor is dead to them and now you become the Rich's Construction of my kitchen remodel. Said is done. Price is not in the driver's seat.

I was sitting in the office of one of our dealers with our rep, who was pitching a replacement for Extron. I remember what the salesperson at the dealership said to him. He said, "Look, it may be better. It may be cheaper. But I'm not switching because Extron gives me perfect service. They bend over backwards for me, I've never had a problem with their boxes and it's just not worth the risk." 

Extron is able to charge more because their customers value them, not just their products.

That's our goal at Tightrope Media Systems. Regardless of where we are with price, which will unavoidably be an important factor, I want our partners to have the sense that in any given situation, we will do what it takes when it comes down to it. It's a goal that not even the best companies are perfect at and it gets even harder to achieve as we grow, but in order to be a lasting company, we need to recognize that the technology that we sell can become a commodity at any minute. The strength of our business and its ability to thrive will rest almost entirely on our capacity to build loyalty and to make fans of our customers. 

Without focusing on that goal, my capacity to buy an ever increasing amount of SmartWool socks will be limited. That is a future too terrible to imagine.